Are you employed, but over-qualified for your current job? Are you working part-time, but looking for full-time work? If you answered yes to either of these questions, you may be underemployed.
What is Underemployment?
Underemployment can take many forms in today’s economy. You might be working a full-time job, but be overqualified for your current position based on your skills, education, or previous experience. Or, you might be working a part-time job, when you’d rather be working full-time.
Underemployment currently affects millions of workers in the US. While the United States Bureau of Labor Statistics (BLS) doesn’t formally measure underemployment caused by skill mismatches, they do measure the number of US workers who currently work part-time despite being available for full-time work. As of March 2019, 4.5 million workers were classified as involuntary part-time workers – those who are employed part-time for economic reasons, rather than by choice.
Regardless of the type of underemployment you’re experiencing, your underemployment could be hurting your earning potential – both now and in the future. Working in low-skill, low-paying, and part-time roles can significantly impact your ability to negotiate for higher pay at your next review, or even in your next role. It can also hinder your ability to accrue relevant career experience in roles that match your skills and qualifications, further limiting your future pay progression and career opportunities.
Why Do Workers Become Underemployed?
At its core, underemployment happens when the labor supply is greater than the demand. But many different factors can cause workers to become underemployed.
- Broad economic factors – economic conditions are the most common cause of underemployment. During a recession, the number of open positions dwindles, while the number of available candidates in the market grows. In these conditions, many skilled workers who would ordinarily have little trouble landing a highly skilled role may wind up underemployed in lower-skilled roles, simply to make ends meet. They may also choose to take part-time jobs and work fewer hours than they are available to work, just so that they can take home a paycheck. This is supply and demand at work.
- Technological advances – technological innovation creates new jobs. But at the same time, the rapid pace of innovation can make certain skills and positions obsolete, almost overnight. Gartner estimates that by 2020, AI will eliminate 1.8 million jobs – but create 2.3 million new positions that support the new AI-powered economy. While this creates a tremendous opportunity for workers that embrace upskilling and career changes, automation, AI, and other technological advances can also contribute to unemployment and underemployment for those who do not – or cannot – adjust to the demand for new skills in the marketplace.
- Lack of demand – underemployment can also occur in pay markets where there is a lack of demand for certain jobs and skills. While some jobs exist in almost all markets, certain highly skilled, technical positions simply may not exist in certain locations. Workers qualified for these roles may need to look elsewhere for employment, or otherwise face underemployment in lower-skilled roles.
- Lack of experience – recent college graduates often face underemployment because while they’re highly educated, they may lack the relevant career experience that employers are looking for in new hires. While many HR professionals discourage experience requirements for entry-level roles, the practice continues to force many recent graduates to accept part-time or lower-paying positions that they are overqualified for.
The Difference Between Visible vs. Invisible Underemployment
One of the challenges with underemployment is that is not always something that you can see, define, and measure. As discussed above, there are two types of underemployment:
- Visible underemployment – employees who work fewer hours than what is considered normal in their field or industry. Visible underemployment is measurable because these involuntary part-time workers clearly stand out against industry or job norms.
- Invisible underemployment – employees who work in jobs that don't utilize all their skills or qualifications. You many not recognize that they are overqualified for their current roles, and because they often work full-time, it is more difficult to measure their underemployment.
The differences between visible and invisible unemployment explains the difficulty that the BLS has in quantifying underemployment in the US. While the BLS is able to measure the number of involuntary part-time workers, they do not have a system in place to poll workers – or their employers – about skill and qualification mismatches.
The Difference Between Underemployment vs. Unemployment
The BLS defines unemployed workers as those who do not currently have a job but are looking for one. Underemployed workers are typically not considered unemployed because they’re currently working – even if they’re not living up to their full potential. However, if you’re currently visibly underemployed but also looking for a new job, you may also be considered to be unemployed depending on how many hours you are working in your current role.
In this case, your underemployment may make it difficult to collect unemployment insurance, as you can no longer collect unemployment pay if you’re earning beyond a certain minimum level in the part-time job you have now.
The laws surrounding unemployment benefits vary state-to-state. Be sure to check the US Department of Labor’s website and your state’s own resources on unemployment insurance for more information about the benefits available to you.
Understanding the Impact of Underemployment
Underemployment is a social issue that affects employment growth, economic growth, career development, poverty levels, and the emotional well-being of underemployed workers. According to economists David Bell, David Blanchflower, and Bruce Rauner, underemployment also takes an outsized toll on the economy as a whole, contributing to income inequality and low wage growth. They theorize that underemployed workers become a wage buffer for employers, reducing the need for companies to hire more people even as work duties expand.
Rather than compete for talent against other employers in order to hire more staff, companies with an underemployed labor force can simply offer additional hours to part-time workers who need the opportunity to make more money.
Breaking the Cycle of Underemployment
Underemployment can be tough to address. Whether your underemployment is visible or invisible, you should take care to address the root causes of your current situation, lest it limit your long-term earning and career potential. If you’re underemployed, consider the following:
- Asking for more duties or responsibilities in your current role – your manager may or may not know that you have more skills to offer. Volunteering for projects, assignments, or responsibilities outside of your job description can be a great way to demonstrate the additional qualifications you bring to the table – and emphasize your positive attitude at the same time.
- Keeping up with the latest technology and trends – upskilling can be a great way to boost your resume and your paycheck. Stay abreast of the technology trends that are shaping your industry, and assess what new skills you may need to learn in order to become a highly sought-after candidate in your field. Your employer may offer tuition assistance, professional development courses, or stretch projects that can help you learn these new skills, especially if they’re directly relevant to your current career track.
- Volunteering or contracting in your chosen field – if you’re not currently working in your dream industry, consider taking on volunteer, part-time, contract, or consulting work that helps you gain valuable experience in your preferred field. While it may not be a huge income generator in the short term, it can help you add to your portfolio and enhance your resume before making the leap into your new industry full time.
- Making a career pathing plan – identifying where you’d like your career to take you can help you understand the steps you’ll need to take to get there. Consider researching your desired career path and putting a plan in place for closing any skill gaps you may have.
- Assessing your worth – the skills, competencies, certifications, years of experience, and education you bring to the table can all affect your worth in the market. A tool like Salary.com’s Salary Wizard can help you understand if you’re underpaid in your current role, as well as what your earning potential could be if you changed positions.